Mainstream economists express skepticism about Piketty
Following a University of Chicago Economic Experts panel on the work of Thomas Piketty, Justin Wolfers pens New York Times Upshot column, “Fellow Economists Express Skepticism about Thomas Piketty.”
“There’s no doubt that Thomas Piketty has reinvigorated the public debate about the causes of income inequality,” says Wolfers, “but has he convinced his fellow economists?” Wolfers argues that economists are intrigued by Piketty’s conclusions, but not convinced.
Wolfers calls the panel “a useful barometer of the views of mainstream economists,” but suggests that “the voices of heterodox schools of thought—where Mr. Piketty is both more popular and more polarizing—are effectively excluded.”
Asked whether “the most powerful force pushing toward greater wealth inequality in the U.S. since the 1970s is the gap between the after-tax return on capital and the economic growth rate,” 80 percent disagreed (21 percent strongly). Still, says Wolfers, “this isn’t really a serious criticism of Mr. Piketty’s scholarship. If surveyed, it is likely that [Piketty] would have joined the majority view in disagreeing with the claim….In Mr. Piketty’s telling, rising incomes among the super-rich are responsible for the recent rise in wealth inequality.”
“The beloved T-shirt Theory [r>g] is not an explanation of recent inequality trends, but rather the basis for [Piketty’s] dire forecasts about rising wealth inequality in our future,” says Wolfers. In spite of all of the critiques of Piketty’s work, he argues, “the past 40 years can hardly be said to falsify a theory that suggests wealth inequality will grow.”
Wolfers' article has been cited by Jordan Weissmann of Slate, “No, Mainstream Economists Did Not Just Reject Thomas Piketty’s Big Theory,” and Jon Hartley of Forbes, “Why Economists Disagree with Piketty’s “r>g” Hypothesis On Wealth Inequality."
Justin Wolfers is a professor of public policy and economics at the University of Michigan and a senior fellow at the Peterson Institute for International Economics.